YES: Businesses react to new regulations and taxes regardless of their intent, primarily to remain competitive and profitable. On one hand, health care costs have been rising faster than both wages and profits; the Affordable Care Act offers (short term) shelter from this trend. There will be an incentive for select individual companies to pay the lower penalty and forgo the higher cost of coverage. This does not mean all companies will choose to pay the penalty, just those for which it is a “good” business decision. On the other hand, some industries facing tight labor markets would still offer a competitive wage/benefit bundle or risk losing valuable employees.

YES: Full costs of providing health care to employees remain in doubt, even after recent Supreme Court decisions. More questions than answers remain, and that sustains the uncertainty businesses have toward hiring and investment. Unknown impending costs for health care do not give business owners confidence to expand operations or hire more people. The ruling could also encourage businesses to shift workers to part time or temporary to avoid the 50-employee threshold. It is likely to be less expensive for some small business owners to pay the penalties or “tax” of noncompliance than pay additional fees to insure all employees.

NO: There might be some companies that pay the penalty instead, but the vast majority of companies will retain their health care coverage. Even before the Affordable Care Act was passed, when companies could have dropped their coverage without any penalty at all, most companies provided coverage to attract and retain good employees. A bigger issue is whether the current system of having health care coverage tied to employment is a good idea. The negative economic consequences of that system include limiting job mobility, discouraging entrepreneurship, and making U.S. companies less competitive, as foreign companies usually don’t have to bear the burden of health insurance coverage.

YES: The Congressional Budget Office estimates that only 3 to 5 million fewer people will obtain coverage through their employer in 2019 than would have been the case under prior law, with companies paying $15 billion in new annual penalty/tax payments by 2019. But a survey by McKinsey & Company found that 30 percent of employers say they will probably stop offering employer-sponsored insurance after 2014. Among employers with a high awareness of details of the health care reform legislation, the proportion was over 50 percent. Of course, another way that firms will try to avoid these costs is by hiring fewer workers.

YES: The $2,000 penalty will no doubt be well below the small-firm cost of providing health care benefits to employees. A recent McKinsey & Company survey suggests many smaller firms (50-199 employees) will rationally choose in 2014 to stop offering coverage to their employees, especially their low-income employees who will be able to obtain lower-cost coverage options by purchasing subsidized insurance on state insurance exchanges created by the ACA. Many of these same firms will likely offer other benefits or higher salaries to partially offset the loss of employer-sponsored insurance, to remain competitive and meet the expectations of employees.